Rise of the Zombie Foreclosures

“Zombie foreclosure” isn’t a home haunted by the walking dead, but instead one haunting an owner who thought they no longer owned the property. However, because the foreclosure process stalled for some reason, they remain on the hook for unpaid property taxes and other fees.

Of the more than 300,000 zombie foreclosures counted by RealtyTrac in 2012, 91,000 were located in Florida, followed by Illinois (32,000) and California (29,000). That’s because in judicial foreclosure states like Florida and Illinois, it takes an average of 62 months—more than five years—for a foreclosure to clear. That's almost twice as long as in a non-judicial foreclosure state, where it takes an average of 34 months, or nearly three years.

How It Happens

During the foreclosure crisis, when banks had trouble selling certain properties, or for various reasons decided foreclosure was not the appropriate resolution, they may not have officially foreclosed on the property. In the meantime, property taxes and other expenses continued to pile up in the owner’s name.

Goose Bumps?

If you’ve been through a foreclosure, it’s probably a good idea to check and make sure your name is no longer listed as owning the property, experts say.

To confirm, contact the company on your past mortgage statements, perform an online title search to verify the current owner, or contact your local tax appraiser or county clerk.

If you are the unwitting owner of a zombie foreclosure, ask your mortgage company what options you have to clear your name from the title. You may be eligible for a Short Sale or Mortgage Release (Deed-in-Lieu of Foreclosure). Both will clear your name, although you may still be liable for unpaid bills.

The main thing is to take action right away. Don’t let a zombie foreclosure overshadow your financial future.